1. PINE CHEMICALS New Normal Alex CUNNINGHAM alexcunn@gmail.com
areldorado.com.ar
Workshop on the Pine Industry, Rescoll
30 October 2012
Bordeaux, France

2. “ The goal of forecasting is not to predict the future but to tell
you what you need to know to
take meaningful action in the
present. ”
Paul Saffo Six Rules for Accurate Effective Forecasting Harvard Business Review, July-August 2007,  

3. PINE FOREST (natural or planted)
Pine Tapping
Timber
Chips
CRUDE GUM (CG)
(Pine oleoresin or Pine resin)
Kraft
Process
Paper
Rosin Plant
Black Liquor
GUM
TURPENTINE
(GT)
GUM ROSIN
(GR)
(CGR, IGR, BGR)
SULFATE
TURPENTINE
(CST)
Pine
Chemicals
Industry
TALL OIL ROSIN
(TORA)
Industry
Industry
Industry
TURPENTINE
DERIVATIVES
POLITERPENIC
RESINS (PTR)
ROSIN RESINS
(RR)
Alex CUNNINGHAM
30 OCTOBER 2012

4. TACKIFIER RESINS Pine Forest Petroleum Tapping Pine resin Black Liquor
Kraft
Process
Tapping
Petrochemistry
“Pine
Chemicals”
Pine resin
Black Liquor
Alex CUNNINGHAM
30 OCTOBER 2012
Industry
Industry
Sulfate
Turpentine
Turpentine
Rosin
Tall Oil Rosin
Pygas
(C5, C9, DCPD)
Industry
Industry
Industry
Polyterpenic
Resins
Rosin
Resins
Hydrocarbon Resins
C5 or C9

5. Volumes and Prices
China the #1!
2012 into a “New Normal”
Field open for new(old) players

6. Volumes and Prices
China the #1!
2012 into a “New Normal”
Field open for new(old) players

7. TACKIFIER RESINS – GLOBAL VOLUMES IN KTON (2011)
ROSIN RESINS
[KTON]
GUM ROSIN
690
TALL OIL ROSIN
390
WOOD ROSIN 10
TOTAL
1.090
HYDROCARBONIC
[KTON]
ASIA
452
NORTH AMERICA
241
EUROPE
252
REST OF THE
WORLD
105
TOTAL
1.050
TACKIFIER RESINS
[KTON]
ROSIN RESINS
1.090
HYDROCARBON
RESINS
1.050
POLYTERPENIC 80
TOTAL
2.220
POLYTERPENIC
[KTON]
USA 30
EUROPE 20
REST OF THE
WORLD
TOTAL 80
Source:
AR Eldorado (2011) & (2012)
Baumassy (2012).
Alex CUNNINGHAM
30 OCTOBER 2012

8. GUM ROSIN – GLOBAL PRODUCTION [TM/YEAR]
- 36 % ?!
1997
2007
2008
2009
2010
2011
2012 +5
+10
China
Brazil
40.000
78.000
67.000
69.000
70.000
Indonesia
56.000
55.000
52.000
Vietnam
15.000
30.000
India
33.000
35.000
31.000
Mexico
22.000
16.000
Argentina
21.000
9.000
11.000
13.000
Other
46.000
17.000
TOTAL
+ 35,3 %
- 24,6 %
- 5,1 %
+ 3,4 %
+ 19,7 %
- 32,2 %
Surces:
Song Lifeng (2009) & (2012)
Rosineb (2009)
AR Eldorado (2011) & (2012)
Baumassy (2012).
Alex CUNNINGHAM
30 OCTOBER 2012

9. GUM ROSIN – CHINESE PRODUCTION [TM/YEAR]
Current Production Record !
[1.000 TM/YEAR]
Province
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Yunnan (YN) 41 44 53 65 70 75
120 90
110
130
195
230
450
Guangxi (GX)
170
200
246
260
270
280
300
290
160
140
Guangdong (GD)
125
126
145
155
165 95 80 83 76
Hubei (HU) 8 12 15 20 30 40 50 67
264
Jiangxi (JX) 24 25 27 72 85
100 37
Fujian (FJ) 47 46 38 35 45 52 60 55 32
Anhui (AH) 2 3 5
Henan (HE) 10
Guizhou (GZ) 4
Hunan (HU) 13 18
Sichuan (SC) 7
Hainan (HA)
Shanxi (SX)
Chongqing (CQ)
Zhejiang (ZJ) 1
TOTAL
439
480
536
588
628
692
828
826
589
553
575
710
9,5%
11,5%
9,7%
6,8%
10,2%
19,6%
-0,2%
-28,7%
-6,1%
+3,9
+23,4
-36,6
Sources:
AR Eldorado (2011) & (2012)
Song Lifeng, Nanjing (Novembro 2009).
Zhao Mingui (2011).
ROSINNET (2010).

11. Volumes and Prices
Historic price peak
China the #1; Brazil and Indonesia #2;
plus many many others…

12. Volumes and Prices
China the #1!
2012 into a “New Normal”
Field open for new(old) players

13. Wuhile Stadium
Shenyang, LN, China
Build in: 1998
Blown in: 2007
9 years!
Olimpic Stadium
Shenyang, LN, China
Build in: 2003
Blown in: 2012
9 years!

14. PREÇOS DO BREU vs. COMMODITTIES

15. GUM ROSIN – CHINESE PRODUCTION MAPLN SA HB AH SC ZJ HU JX GZ FJ YN GD GX HN

16. EVOLUÇÃO SALARIAL - CHINA
2004
2006
2008
2010
2011
2012
GUANGZHOU (Cidade)
Salário Mínimo
(RMB/mês)
684
780
860
1.100
1.300
1.470
Temporário Construção (RMB/dia)
70 ~ 90
90 ~ 120
100 ~ 130
120 ~ 170
130 ~ 200
GUANGDONG (Provincia)
Temporário
Rural
(RMB/dia)
50 ~ 70
60 ~ 80
70 ~ 100
110 ~ 150
6,3 RMB = 1 USD
3,2 RMB = 1 R$

17. CHINA – PINE TAPPER 1 WORKER 1500 TREES 2 KG PER TREE/YEAR
PINE TREE “RENT”
6 RMB / TREE YEAR = (9.000)
“ADMINISTRATION” COST
500 RMB / MT PINE RESIN * 3 TON = (1.500)
SALE OF PINE RESIN TO ROSIN PLANT
3 ton * RMB / MT =
===========
NET RMB
/ 25 DAYS * 6 MONTH = RMB/DAY

18. CHINA – PINE TAPPER 1 WORKER 1500 TREES 2 KG PER TREE/YEAR
PINE TREE “RENT”
6 RMB / TREE YEAR = (9.000)
“ADMINISTRATION” COST
500 RMB / MT PINE RESIN * 3 TON = (1.500)
SALE OF PINE RESIN TO ROSIN PLANT
3 ton * RMB / MT =
===========
NET RMB
/ 25 DAYS * 6 MONTH = RMB/DAY
CURRENT PINE RESIN
PRICE IN CHINA

19. CHINA – SALARY EVOLUTION
2004
2006
2008
2010
2011
2012
GUANGZHOU (City)
Minimun Wage
(RMB/month)
684
780
860
1100
1300
1470
Construction
Temporary
(RMB/day)
70 ~ 90
90 ~ 120
100 ~ 130
120 ~ 170
130 ~ 200
GUANGDONG (Province)
Rural
50 ~ 70
60 ~ 80
70 ~ 100
110 ~ 150
QUINQUENAL PLAN 2011/2016
+ 15% PER YEAR!
2016  2570 RMB/month

21. China the #1 = The “Perfect Storm”
Speculation
Limited forest resources
Hand labor scarcity

22. Volumes and Prices
China the #1!
2012 into a “New Normal”
Field open for new(old) players

25. 2012 into a “New Normal”
Example: Brazil vs. China export
market

26. Volumes and Prices
China the #1!
2012 into a “New Normal”
Field open for new(old) players

27. Field open for new (old) players
Demand for “Pine Chemicals”
Sustainable supply
Competitive price
Modern tapping technique

28. Thank you!